UK exports could surge if SME export finance guarantee scheme promoted more effectively – London Business News | Londonlovesbusiness.com

SME exports could grow if more companies were aware of and using ‘GEF’ – the General Export Facility – a relatively unknown but valuable government scheme designed to boost Britain’s SME exports by providing an 80% guarantee to banks for loans to businesses specifically engaging in exports.

GEF is one of several export finance initiatives overseen by the government’s Export Credit Agency which in 2023 provided around £6.5 billion of financial support to UK exporters.

The GEF scheme, however, is a relatively unknown element of the overall financial support provided to exporters and is failing to achieve any real impact across the SME sector, its main target market and where there is considerable potential to drive export volume, according to a leading business finance specialist with UK top ten accountancy and advisory firm Azets.

“Feedback from SMEs and analysis of GEF data reveals that only 5.4% or around £350m of total financial support for exporters (£6.5bn) utilises GEF. There is considerable potential to dramatically increase the number of SMEs that are aware of GEF and the 80% government guarantee,” said Mark Barrie, funding and strategic partnership director with Azets.

“Although there is no published cap on the gross amount that the government will guarantee it is concerning that in 2022-2023 just £350m of GEF guarantees were accessed. There is considerable potential for GEF to help SMEs build their export business however this potential is being thwarted by low awareness of GEF, poor distribution and minimal marketing.”

Mark said that the Export Credit Agency needs to invest time and resources in ensuring that SMEs are aware of GEF, and that banks need to have GEF front of mind when helping their customers access export finance options.

“Given that the government underwrites up to 80% more banks need to proactively offer GEF as a key part of their financial support packages for the SME sector. Although there is huge potential for more banks to offer GEF to their client base, SMEs still need to satisfy their bank’s lending criteria and due diligence tests. SMEs should also take the initiative and ask for GEF when negotiating financial support.”

He added: “Targeting £1 billion of GEF guarantees for SME exporters per annum as a minimum should be an achievable goal. As such, SME exports would be given a major boost if the potential of GEF can be properly unlocked.”

Azets has a London office at London Bridge.

The GEF criteria

GEF can provide an 80% guarantee to pool of banks to support SME’s trade facilities such as trade loans and working capital with repayment terms of up to five years.

To qualify, companies must be able to demonstrate that in any one of the last three years at least 20% of turnover has come from UK export sales or that at least 5% of turnover has been made up of UK export sales during each of the last three years.

SMEs must also have premises and employees in the UK, pay corporation tax or make National Insurance contributions, manufacture goods in the UK or sell intangibles from the UK.